Fredun Pharma (539730)

Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Return on equity of 26.02% and ROCE of 18.94% show efficient capital allocation
• Sales growth of 56.70% and profit growth of 96.62%, with a PEG of 0.33, suggest the market has not fully priced in continued fast growth
• Piotroski F-Score of 7/9 indicates solid fundamental health across profitability, leverage, and operating efficiency
• Latest quarter revenue of ₹161 Cr against a market cap of ₹398 Cr implies a modest price-to-sales level, though margins remain the key test

Concerns

• Reported 52-week range of ₹1,016.20-₹2,620.00 does not include the current price of ₹827.85, raising data integrity or price-history concerns
• Latest quarter net margin is only about 6.2% (₹10 Cr profit on ₹161 Cr sales), leaving a thin buffer against cost pressure
• Debt/Equity and promoter holding are not available, so financial leverage and governance cannot be assessed
• Dividend yield of 0.04% means there is no income cushion; all returns must come from capital appreciation

AI Analysis

Let me start with what I admire: Fredun Pharma earns a return on equity of 26% and a return on capital employed of nearly 19%. That is real capital efficiency, and it is the first thing I look for. Sales grew 56.7% and profits jumped 96.6%. The PEG ratio of 0.33 tells me the market's 25.6 times earnings is not pricing in continued growth. The Piotroski score of 7 out of 9 also suggests a financially disciplined business, not a cash burner. But Graham taught me to demand a margin of safety, and I see several warning lights. The latest quarter had sales of ₹161 Cr but net profit of only ₹10 Cr, a thin 6% margin. A business with that margin can trip badly when costs rise or prices fall. I don't have debt-to-equity data or promoter holding figures, so I cannot judge who is steering the ship or how much leverage is underneath. The reported 52-week range of ₹1,016 to ₹2,620 does not even include today's price of ₹827.85. That makes no sense; either the data is wrong or the stock has fallen far beyond its so-called low. I will not build a thesis on a number that does not reconcile. I also note the dividend yield is only 0.04%, so I am entirely dependent on capital gains. For a ₹398 Cr small-cap pharma, that means I need flawless execution. The price-to-earnings ratio is not excessive, but it is not the deep bargain Graham would want. If growth continues, this is a fast grower; if growth stalls, the market will re-rate quickly. I would wait for more complete information and a clearer price history before putting my money here.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer